This report is read as follows:
The company's mid-2016 reported revenue increased by 44% compared with the same period last year, Qihua net chemical trade revenue of 1.036 billion yuan, a sharp increase of 97% over the same period last year, and made a profit for the first time; the company's state-owned enterprise reform has been carried out in an orderly manner, and it is expected to build a daily chemical platform for extension.
Main points of investment:
Investment advice: Qihua net, the chemical trading platform of the company, saw a 97% year-on-year increase in revenue in the first half of 2016, and made a profit for the first time. With the overall acceleration of the reform of local state-owned enterprises in 2016, the company, as the only listing platform under Guangzhou Light Industry Group, asset integration and epitaxial mergers and acquisitions to create a daily chemical platform is worth looking forward to. Considering the decline of the company's chemical trade gross profit margin, the company's EPS in 2016-2018 will be lowered to: 0.12 (- 0.04) / 0.18 (- 0.03) / 0.24 (- 0.04) yuan; with reference to the industry average, the company will be given 2016PS0.9X, and the target price will be lowered to 18 yuan to maintain the "overweight" rating.
Qihua net chemical trade volume took off, gross profit margin fell to the overall profit decline. The company achieved revenue of 4.454 billion yuan in the first half of 2016, an increase of 44.31% over the same period last year, and its net profit was 12 million yuan, down 9.36% from the same period last year, which was lower than market expectations. Qihua, the company's chemical trade center, reported revenue of 1.036 billion yuan, a sharp increase of 97% over the same period last year, and a net profit of 2.49 million yuan, making a profit for the first time. It also led the company's sales of civil and industrial products to increase by 72% and 37% respectively compared with the same period last year. The proportion of chemical trade increased, and the company's gross profit margin was reduced by 1.59pct to 2.41%. At the same time, the three expense rates also benefited from the increase in sales scale, which decreased 1.12pct compared with the same period last year.
In 2016, the reform of local state-owned enterprises accelerated and expanded internally to create a daily chemical platform. The company is the only listing platform under Guangzhou Light Industry Group, Guangdong is the forefront of state-owned enterprise reform, and the overall listing of state-owned enterprises in Guangzhou is expected to be strong, so improving the asset securitization rate has become the focus of the group and the company. At the same time, the company has set up a merger and acquisition fund, which is expected to make use of industrial capital to carry out extension mergers and acquisitions in the areas of great health, big daily chemical and large consumption, and to create a daily chemical platform through the integration of high-quality assets related to the group daily chemical and industrial fund extension mergers and acquisitions.
Risk hint: the progress of reform is lower than expected; asset integration is uncertain.